WYT Study Guide

Electricity and poverty in Rural America

Rural America in the 1800s and Early 1900s

During the 1800s and early 1900s, millions of Americans lived in rural communities, where farming was the main source of income. Rural families often worked extremely hard but had limited opportunities to improve their standard of living.

Poverty was especially difficult to escape because many rural communities lacked infrastructure that cities increasingly enjoyed. Roads were often poor, schools were small and underfunded, medical care could be far away, and many homes lacked indoor plumbing, telephones, and electricity.

Farm families also depended heavily on the success of their crops and livestock. Drought, floods, insects, disease, or falling crop prices could quickly reduce a family's income. Many farmers borrowed money for land, seed, equipment, and supplies, leaving them vulnerable to debt.

The Growing Difference Between Cities and Rural Communities

By the late 1800s and early 1900s, American cities were becoming increasingly industrialized. Factories created jobs, new transportation systems developed, and electric power began transforming daily life.

Electricity provided lighting, refrigeration, communication, machinery, and new businesses. However, these benefits did not reach everyone equally.

By the 1930s, electricity was common in American cities, while the large majority of farms still did not have electric service. Private electric companies often considered rural areas too expensive to serve. Farms were spread far apart, meaning utilities had to build many miles of power lines to reach relatively few customers.

This created an important economic disadvantage: people without electricity could not easily use the new technologies that were increasing productivity and improving living standards elsewhere.

The Great Depression Makes Rural Poverty Worse

The Great Depression, beginning in 1929, made existing rural poverty even more severe. Farm prices fell, families struggled to repay debts, and many farmers lost their land.

Conditions were especially severe in parts of the Great Plains during the Dust Bowl of the 1930s. Years of drought and severe dust storms damaged farms and forced many families to leave their communities in search of work.

The federal government began looking for ways to improve rural economies and give rural families access to infrastructure that could create long-term economic opportunity.

Bringing Electricity to Rural America: FDRs New Deal

In 1935, President Franklin D. Roosevelt created the Rural Electrification Administration (REA) as part of the New Deal. Rather than simply giving electricity away, the federal government helped provide financing with low interest loans that allowed rural communities to build electrical systems. Because many private utilities still did not want to serve sparsely populated areas, rural residents organized electric cooperatives.

A cooperative is a not-for-profit business that is owned by the people it serves. Neighbors worked together to establish electric systems, borrow money, build power lines, and bring electricity to their homes, farms, and communities.

How Electricity Helped Reduce Rural Poverty

Electricity did more than provide light. It became a tool for economic development.

Farmers could use electric pumps, motors, milking machines, refrigeration, and other equipment. These technologies reduced the amount of manual labor required and allowed farms to become more productive.

Electricity also improved everyday life. Refrigerators helped preserve food. Electric pumps made access to water easier. Lighting allowed people to work, read, and study after sunset. Rural schools and businesses gained access to technologies that were already becoming common in cities.

Most importantly, electricity helped rural communities participate more fully in the modern American economy.

The Bigger Lesson

Rural electrification demonstrates how infrastructure can affect poverty.

Electricity did not eliminate rural poverty by itself. Changes in agriculture, education, transportation, government policy, technology, and the overall economy also played important roles. However, access to affordable electricity removed a major barrier to economic opportunity.

Key Idea to Remember

Rural electrification helped reduce poverty by giving rural Americans access to technologies that increased productivity, improved living conditions, supported education and businesses, and connected rural communities to the growing national economy.

Important Terms

Rural Poverty: Economic hardship experienced by people living in sparsely populated areas.

Great Depression: Severe worldwide economic downturn beginning in 1929.

Rural Electrification Administration (REA): Federal program created in 1935 to help expand electricity into rural America. Part of Franklin Delano Roosevelt's New Deal.

Electric Cooperative: A member-owned electric utility created to provide electricity to the people and communities it serves.

Infrastructure: Basic systems—such as electricity, roads, water, and communications—that allow communities and economies to function.

Economic Development: Improvements that create jobs, increase productivity, raise incomes, and expand economic opportunities.

What is an Electric Cooperative?

An electric cooperative in the United States is a not-for-profit organization jointly owned and equally controlled by those using its services for mutual benefit.

There are nearly 900 rural electric cooperatives operating today in 49 states. The only state without rural electric cooperatives is Connecticut.
Each one is an independent, locally owned business enterprise, incorporated under the laws of the state in which it operates.
Customers who receive electric service are member-owners of the cooperative and, as such, share responsibility for its success or failure.
The greatest assets of an electric cooperative are the member-owners and their participation in its democratic process of operation.
As democratic institutions, electric cooperatives afford a large number of people—the member-owners—an opportunity to take part in the decision-making of their cooperative through their votes. Each member-owner is entitled to one vote in cooperative elections. This is a unique right which customers of other electric utility companies do not have.
This process ensures that cooperative member-owners have controlling authority over the cooperative’s board of directors. The “one member-one vote” concept is not only a right of cooperative members, it is a responsibility.

SSVEC is a Rural Electric Distribution Cooperative

Most Rural Electric Systems are Distribution Cooperatives.

Distribution cooperatives purchase power at wholesale prices and deliver it to members. SSVEC was incorporated on November 21, 1938, to obtain Rural Electrification Administration (REA) financing. This financing from REA enabled SSVEC to bring power to the farms, ranches, and towns of southeastern Arizona. SSVEC’s membership fee was $5.00 in 1938, and it remains $5.00 today.

Board of Directors

Members elect a Board of Directors. Each member has one vote in the election of a director and in any other decision brought before the membership. Bylaws adopted by the members set forth their rights and responsibilities, the procedures for electing Directors, and other guarantees for a democratically run organization. SSVEC has 9 Directors who serve three-year terms. Election of Directors is conducted by mail ballot.

Voting Districts

SSVEC is divided into 9 voting districts for the purpose of director elections. Districts are divided geographically to provide representation throughout the service area. Members in each SSVEC voting district elect one representative to the Board of Directors, which makes up the10 who serve. The president of SSVEC’s Board of Directors is Randy Redmond, who became board president in 2024. SSVEC’s Board of Directors hold regular monthly meetings on the Wednesday following the third Monday. The meetings are open to the public and a “call to members” is provided on the agenda. The approved minutes from every board meeting are available at all Cooperative offices, and on our website at www.ssvec.org

SSVEC’s CEO

The Board of Directors hires a Chief Executive Officer (CEO) to take charge of operating the cooperative for the benefit of the members. SSVEC’s CEO is Jason Bowling. He is responsible to the Board for carrying out the day-to-day operations within the guidelines determined by the Board. The CEO hires the employees who make up the Cooperative’s staff.

Is SSVEC Regulated?

Regulated by Arizona Corporation Commission

By state law, SSVEC is considered a monopoly because it is the only electric utility allowed to provide electric service within its certificated boundaries. The Service Area included in the certificated boundaries is defined by the Arizona Corporation Commission (ACC). Because the Cooperative is the sole provider of electric service in that area, it is regulated by the ACC, as are investor-owned utilities like Arizona Public Service (APS) and Tucson Electric Power (TEP). SSVEC’s rate schedules and service conditions must be approved by the ACC.

Annual Meeting

SSVEC’s articles of incorporation require the Cooperative to hold an annual meeting each year for the purpose of reporting to members about the operation of their cooperative for the previous year, and to transact other business that may come before the membership. SSVEC holds its annual meeting on a rotating basis in Willcox, Benson, and Sierra Vista between April 1 and June 30.

Communications with Members

Currents is SSVEC’s official publication. It is used to inform members of important notices and provides information about their cooperative. It is published bi-monthly and mailed directly to members. SSVEC also informs members through monthly bill inserts and bill messages as well as an emailed newsletter, newspapers, television, and radio advertising. The Cooperative maintains a website (www.ssvec.org) and Facebook page as well as Twitter and YouTube accounts.

Educational Programs

The SSVEC Youth Programs supports students in our service area to help build a strong foundation for the future.

Washington Youth Tour: Competition for a week-long trip to Washington D. C. in June. High school juniors come from all over the country to learn more about government, cooperatives, and rural electrification.
Youth Engineering and Science (YES) Fair for students in grades 5-12. The fair encourages talented youth to create projects in science, engineering, and technology. It encourages students to enter careers in the scientific and engineering fields.
Scholarships In 2001 SSVEC offered$1,000 scholarships. Now, SSVEC offers forty $4,000 scholarships for graduating seniors in our service area going to trade schools or college.
Safety programs offer educational programs for youth on safety, energy, rural electrification, careers, and energy management.
Microgrants for teachers and Educational Entity Grants fund programs of exceptional merit throughout our service territory.

SSVEC’s Service Area

SSVEC serves most of Cochise County and parts of Graham, Pima, and Santa Cruz counties, covering about 5,753 square miles. The Cooperative is headquartered in Willcox with full-time branch offices in Sierra Vista and Benson, and part-time branch offices in Patagonia and Elfrida.

Number of Members and Miles of Energized Line

As of May 2020, SSVEC had 39,000 members, 60,000 meters and 5,000 miles of energized line.

Benefits of the Not-For-Profit Business Model

A key goal of SSVEC is to deliver safe, reliable, and affordable energy to its members. Following a not-for-profit business model ensures that our focus remains on our members and the affordability of electricity, rather than shareholders. Our goal is to ensure affordability and one way to do that is to take a profit-making mentality out of the business model.

Taxes, Net Margins, and Member Equity

Taxes and Net Margins

Except for income tax, cooperatives pay all taxes other businesses pay—and at the same rates. Because cooperatives are not-for-profit and return revenues in excess of expenses to their members, there isn't a profit or "net income" to tax. The Cooperative is obliged by law and its bylaws to return money collected beyond expenses. These funds are known as “net margins”.

SSVEC pays property, sales, payroll, and franchise taxes. In fact, SSVEC is the second largest property taxpayer in Cochise County.
In all, SSVEC pays over $15 million in property, sales/use, and payroll taxes as well as franchise fees each year.

Local Cooperative Operations

The purpose of an electric cooperative is to provide electric service to its members at reasonable rates. Electric cooperatives must charge rates to

Operate and maintain the electric grid
Repay loans for upgrading and expanding service to meet members’ needs
Cover the cost of production and transmission of all electric power which the members use
Maintain the equity capital required for its operations and to meet the requirements of lenders

Building for Growth

Building to meet the growth of rural areas and to ensure adequate, reliable power for present member needs requires ever-increasing amounts of capital. This means that electric cooperatives must charge their members rates which are high enough to repay all loans and to build and maintain electric lines and equipment. In addition, a cooperative must pay the increasing costs for building new power generation facilities, fuel, and the expenses of providing service. A cooperative must produce minimal net margins (profits) at the end of the year in order to stay in business and continue to provide service.

Member Equity—Return of Margins to Members

In a not-for-profit business model, the net margins (money remaining after paying all expenses) do not belong to the cooperative—they belong to the individual members who paid their monthly bills. It is impossible to plan the operations so precisely in advance that revenues come out exactly even at the end of the year. Some margins (money) must remain after expenses are paid so the business may continue to operate and plan for emergencies and price increases. SSVEC must also have sufficient margins from its operations to repay the principal on its loans.

Where Do Excess Margins Go?

The margins earned each year are recorded in a special Member Equity account for refund at a future time. Each member’s share is assigned in proportion to the amount of electricity used by that member. As the financial position of the Cooperative permits, Member Equity assigned from earlier years are refunded to members. In 2022, SSVEC refunded Member Equity totaling more than $5 million.

How Does Electricity Get to your House?

Can you store electricity?

Although storage of electricity is possible, it is difficult and expensive. Most electricity is used as soon as it is generated. This means moving electricity from the power plant, where it is generated, to the many different members using it.

What are all the wires on electric poles for?

As electricity is generated, it is transformed and transported instantaneously through a network of wires to the customer. A connection of wires exists every inch of the way from the generator to your television, refrigerator, or porch light. The systems of wires used to transport electricity are known as transmission and distribution lines.

What are the steps to distributing the power?

The transmission system transports electricity from the generator to the main substation that serves a given area.
At the main substation, the voltage is reduced through transformers.
Once it passes through the transformers and the voltage is reduced, the electricity is then passed on to the distribution substations.
Then, distribution lines deliver the electricity into homes, businesses, offices, and factories.

What is "The Grid"

This whole interlocking system of electricity delivery is commonly known as “the grid.”

322 miles, or approximately eight percent, of SSVEC’s grid consist of transmission lines.
The remaining 92 percent (3,846 miles) are distribution lines.
SSVEC’s huge network of transmission and distribution lines, transformers, switches, and protective equipment to deliver power to its customers is valued at over $400 million.

Wholesale Power Supply: How Does SSVEC Get its Power?

Power supply, broadly speaking, has two parts: electricity generation and electricity transmission.

SSVEC purchases wholesale electricity from Arizona Electric Power Cooperative, Inc. (AEPCO), which is headquartered in Benson, Arizona.

AEPCO is one of 62 Generation and Transmission (G&T) electric cooperatives in the nation. AEPCO was formed in 1961 by four distribution cooperatives, which became its founding Class A Members: Duncan Valley Electric, Graham County Electric, Sulphur Springs Valley Electric, and Trico Electric.
AEPCO owns and operates the Apache Generating Station (Apache) near Cochise, Arizona, which is east of Benson. The plant provides power to more than 161,000 electric meters and 420,000 people in Arizona, California, and New Mexico. The plant has a gross generating capacity of 605 megawatts and does so through three steam generating units and four gas turbines.
AEPCO also owns all or a portion of 866 miles of electric power transmission line and 36 substations/switchyards in a network that reaches out from Apache and across Arizona to the northwestern corner of the state. The system includes more than 30 telecommunications towers used for phone and data relay services by AEPCO’s Member cooperatives and customers. From this network, AEPCO’s Member distribution electric cooperatives, such as SSVEC, take the power and distribute it to their member-consumers at the end of the line.

Organizations Throughout the State & Nation

State & National Organizations

Soon after their formation, rural electric cooperatives found there were certain areas in which their operations could be made more economically efficient on a collective basis. Many cooperative systems work together in national and statewide organizations to provide a variety of economical, professional and supply services. These organizations provide the advantages of the economies of scale in larger utility-type operations without infringements upon the rights and concepts of each individual system. Electric Cooperatives in Arizona SSVEC is one of nine electric cooperatives in Arizona. The other cooperatives are Arizona Electric Power, Duncan Valley, Graham County, Mohave, Navopache, Sierra Southwest, Southwest Transmission, and Trico. Duncan Valley, Graham County, Mohave, Navopache, Sulphur Springs Valley, and Trico electric cooperatives are distribution cooperatives.

Electric Cooperatives in Arizona

SSVEC is one of nine electric cooperatives in Arizona. The other cooperatives are Arizona Electric Power, Duncan Valley, Graham County, Mohave, Navopache, Sierra Southwest, Southwest Transmission, and Trico. Duncan Valley, Graham County, Mohave, Navopache, Sulphur Springs Valley, and Trico electric cooperatives are distribution cooperatives.

Statewide Association - GCSECA - Grand Canyon State Electric Cooperative Association

GCSECA provides supplementary services to local co-ops. Services include safety and job training; educational programs for employees and directors; and representation in state and national regulatory and legislative matters. Most states have a statewide cooperative association, created and supported by its surrounding electric cooperatives. Arizona’s statewide association, of which SSVEC is a member, is the Grand Canyon State Electric Cooperative Association in Phoenix. Incorporated in 1950, the nonprofit association represents nine Arizona electric cooperatives and 24 associate members.

NRECA - National Rural Electric Cooperative Association

NRECA is the national service organization for more than 900 rural electric systems in 47 states. It is a nonpartisan and nonprofit organization owned and controlled by its member rural electric systems. NRECA was founded in March 1942 by individuals concerned with the problems confronting rural electric cooperatives. They envisioned that NRECA would unite rural electric systems under one banner to protect their interests and provide support to help them serve rural America. Through NRECA, headquartered in Arlington, Virginia, rural electric systems are provided a variety of essential services which would be unavailable or too expensive if each system attempted to provide these services individually. Among the services are management training and evaluation programs, educational development programs, assistance with member information and communications and legislative lobbying. NRECA finances its operations with annual dues from members and income provided by its revenue-producing services.One such program, organized and coordinated by NRECA, is the Washington Youth Tour. Member cooperatives can participate by sending students from their areas, developing their own criteria for students to qualify.

Financing Expensive Equipment

REA/RUS Financing

REA - Rural Electrification Administration

RUS - Rural Utilities Service

SSVEC was incorporated in 1938. It relied heavily on financing through the REA, which later became the RUS. These low interest funds made it possible for the Cooperative to bring electric service to southeast Arizona and keep it operating (and growing) for more than eight decades.

However, in 2004, SSVEC refinanced its loans through the National Rural Utilities Cooperative Finance Corporation and no longer borrows money from the RUS.

Cooperative Finance Corporation

CFC is a not-for-profit cooperative financing institution that provides its member-systems with an independent source of loan funds as a supplement to loans made by RUS.

COBANK

SSVEC also secures loans through an entity known as CoBank. CoBank is a national cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing, and other financial services to agribusinesses, rural power, water, and communications providers in all 50 states.

What Forms of Renewable Energy Does SSVEC Have?

Renewable Energy

Renewable energy is energy generated from natural resources—such as sunlight, wind, rain, tides, and geothermal heat—which are naturally replenished.

“In its various forms, renewable energy derives directly from the sun, or from heat generated deep within the earth. Included in the definition are electricity and heat generated from solar, wind, ocean, hydropower, biomass, geothermal resources, and biofuels and hydrogen derived from renewable resources."

From Renewable Energy . . . into the Mainstream

The International Energy Agency’s Renewable Energy Working Party

SSVEC has solar arrays at three of its substation sites: A new 20 MW solar with 20 MW of battery installation in McNeal, AZ, six acres at the San Simon Substation with a total capacity rating of 1.22 megawatts, and one acre at the Alamo Substation (in Sonoita) with a capacity rating of 260 kilowatts
In addition, in 2008 SSVEC installed a total of 41 solar shade structures to provide solar power to elementary schools, middle schools, high schools, and colleges in SSVEC service area.
In December of 2016, SSVEC along with SunPower announced completion of a solar project in Cochise, Arizona, that provides 20 megawatts of power. SSVEC is contracted to purchase the power from the project built and maintained by SunPower. The project has approximately 53,000 solar panels covering 100 acres. The 20 megawatts of solar power from this project means that SSVEC is the first utility in the state to exceed Arizona’s renewable energy standards set for the year 2025.

Key Terms to Know

Energy Demand

Maximum amount of electricity used at a given time (typically measured in a continuous 15-minute interval)

Fossil Fuel

Fuels such as oil, coal or natural gas that are formed by the decomposition of dead organisms

Grid

A system of interconnected high-voltage transmission lines and power-generating facilities that allows bulk-power suppliers to share resources on a regional basis. This system provides emergency generation and transmission

Heat Pump

A mechanical device for heating and cooling a building by moving heat inside during winter and outside during summer

Investor-Owned Utility (IOU)

A utility that generates and/or distributes electrical energy for profit. An investor-owned utility is owned and controlled by stockholders.

Kilowatt-Hour

The energy that will be expended by using 1,000 watts of electricity for one hour. (ex: a 100-watt light bulb for 10 hours uses one kilowatt-hour of energy)

Megawatt

One million watts or 1,000 kilowatts(kW)

Nuclear Fission

A nuclear reaction in which the nucleus of an atom splits into smaller parts. (This reaction is the source of energy for nuclear power plants as it heats water to turn turbines to generate electricity.)

Outage

Interruption of service to an electric customer

Peak Load

Maximum electricity demand

Photovoltaic (PV)

Method of generating electrical power by converting solar radiation into direct current electricity using semiconductors

R-value

A measure of effectiveness of insulation. The R-value indicates the insulation’s resistance to the passage of heat. The higher the R-value, the greater the resistance and the better the insulation

Renewable Energy

Renewable energy is energy generated from natural resources—such as sunlight, wind, rain, tides, and geothermal heat—which are renewable (naturally replenished).

Substation

A facility for the transfer of electricity from generator to customer by reducing voltages to values appropriate for distribution

Watt

The electrical unit of power or the rate at which electrical energy is being consumed. One watt is the power in a circuit with an electromotive force of one volt and a current of one ampere

kWh Meter

Device that measures the current flow into the home and records the number of kilowatt hours (kWh) consumed.

Washington Youth Tour Study Guide